MANUEL LIM AND EMILIA QUINTOS DE LIM, PETITIONERS AND APPELLANTS, VS. THE REGISTER OF DEEDS OF RIZAL, OPPOSITOR AND APPELLEE.

Lim versus Register of Deeds of Rizal

The Case

This is the case of Lim versus the Register of Deeds of Rizal, decided in February 1949. Spouses Manuel Lim and Emilia Quintos de Lim had paid off a mortgage on their registered land, but the deed of cancellation was lost when Manila was liberated. When they asked the Register of Deeds of Rizal to register a replacement deed of cancellation, he refused unless it carried a reservation subjecting the transaction to whatever the Government might later decide about dealings made during the Japanese occupation, a reservation required by a circular of the Secretary of Justice. The spouses went to court to compel registration without that reservation. The case matters because it fixes the limits of a department secretary's rule-making power over registries of deeds, and because it tells us that a register of deeds performs a ministerial duty and may not add to or subtract from the instrument presented to him.

Procedural History

The spouses first asked the Court of First Instance of Rizal, Rizal City Branch, to order the Register of Deeds of Rizal to register the cancellation without the questioned annotation. The Register of Deeds opposed, relying entirely on Circular Number 14, series of 1945, of the Department of Justice, and on his duty as a subordinate of the Secretary of Justice. The lower court upheld the Register of Deeds and denied the petition. The spouses appealed that order directly to the Supreme Court, and the case was decided on appeal.

Facts

On December 2, 1940, the spouses mortgaged four parcels of land, with their improvements, covered by transfer certificate of title number 21783 of the Register of Deeds of Rizal, in favor of the Agricultural and Industrial Bank for 10,500 pesos, payable in installments. They made partial payments over time, and on June 5, 1944, they paid the balance in full. The bank then executed a deed of cancellation of the mortgage.

On October 3, 1944, the deed of cancellation and the owners' duplicate of the certificate were filed with the Register of Deeds for the City of Manila, the corresponding fees were paid, and the deed was entered in the Day Book at eleven and five minutes in the morning. The records of that office were later lost or destroyed during the liberation of Manila, and the Register of Deeds of Manila certified that the document no longer appeared among the salvaged records.

In February 1947, the Court of First Instance of Rizal ordered the Register of Deeds of Rizal to issue a new duplicate of the certificate in lieu of the owner's copy that was burned or lost, without the cancellation annotated. To facilitate the annotation, the spouses obtained a new deed of cancellation from the Rehabilitation Finance Corporation, successor of the bank, but this new deed carried the annotation that it was subject to such further disposition as the Government may adopt regarding transactions consummated during the Japanese occupation. The spouses demanded registration without that annotation. The Register of Deeds refused, invoking the circular, and the spouses sought court relief.

Issues

• Whether or not the annotation required by Circular Number 14 of the Secretary of Justice is an encumbrance on the title that may be imposed without legal authority.
• Whether or not the Secretary of Justice had the power to issue the circular directing registers of deeds to insert that annotation.
• Whether or not the Register of Deeds may be compelled to register the deed of cancellation without the annotation.

Applicable Provisions

Section 39 of Act Number 496, the Land Registration Act, as amended, provides:

Every subsequent purchaser of registered land under the Torrens System who takes a transfer certificate of title for value in good faith, shall hold the same free of all incumbrance, except those noted on the certificate and any of the legal incumbrances enumerated in said section.

This is the provision the Court uses to show that the reservation, never noted on the certificate or on the original deed, cannot burden the title.

Section 79 (B) of the Administrative Code provides:

The Secretary of Justice is only empowered to promulgate rules, regulations, orders, circulars and other instructions not contrary to law, to all offices and dependencies of his department.

This defines the limit of the Secretary's circular-making power, which the Court holds was exceeded.

Ruling

On the first issue, the Court held that the annotation would be an encumbrance on the title or a charge on the property, because it would make the title subject to any action the Government might take on the validity of payments made with Japanese war notes. Such an encumbrance was not and could not have been noted on the certificate or on the original deed of cancellation, which were lost or destroyed.

On the second issue, the Court held that the Secretary of Justice had no power or authority to order the Register of Deeds, by the circular, to insert the annotation, and that the Register of Deeds was not bound to comply. Under Section 79 (B) of the Administrative Code, the Secretary may issue only instructions not contrary to law, and compliance here would be contrary to the Constitution, for it would impair the obligations of contract or deprive a person of property without due process of law. The Court rejected the argument that the circular was an exercise of the police power, because Congress had not delegated that power to the Secretary of Justice, and a delegated legislative power cannot be delegated further.

On the third issue, the Court held that the Register of Deeds must register the cancellation without the annotation. The new deed from the Rehabilitation Finance Corporation was no bar: the original deed of June 5, 1944, could not have contained the annotation, and the Register of Deeds admitted that his only ground for refusal was the circular. The Court also noted that payments made with Japanese war notes during the occupation, accepted by the creditor, are valid and release the obligation, so the reservation served no purpose.

Doctrine

A register of deeds performs a ministerial duty: he records the instrument presented without adding to or subtracting from its terms. The Secretary of Justice may issue circulars only when they are not contrary to law, and may not, by circular, impose an encumbrance on a Torrens title that the law does not authorize. The police power belongs to the State through the legislative branch, and a legislative power delegated to an officer cannot be delegated by him to another. A reservation that would impair the obligation of a contract or deprive a person of property without due process is void.

Disposition

The Court reversed the order of the lower court and ordered the Register of Deeds of Rizal to register the deed of cancellation of the mortgage without the questioned annotation.

Remember This

Memorize this line: the register of deeds has a ministerial duty to record the instrument as presented, and the Secretary of Justice cannot, by circular, add an encumbrance the law does not allow. Examiners use this case on the limits of administrative rule-making, the police power, and the Torrens system's guarantee of a clean title.